There is a new round of soul-searching at the Planning Commission, a body that was once at the heart of India’s growth and development plans but which has struggled to stay relevant since the economic reforms of 1991 cut the role of government in directing investments and spending. Mint reported on Tuesday that Arun Maira, Planning Commission member and former head of the Boston Consulting Group in India, has been asked to look at how the apex body can reinvent itself.

A simple solution would be to scrap the commission. It is not a constitutional body and has traditionally derived its authority from the political backing given to it by Jawaharlal Nehru and subsequent prime ministers. It was set up through a simple government resolution in 1950 and wielded great power during the high noon of India’s tryst with planned development. A centralized planning body in a market economy is now an oxymoron.

Illlustration: Jayachandran / Mint

But there are two alternatives to such an extreme solution. One, the Planning Commission can become an implementation commission, as former finance minister Yashwant Sinha suggested in an interview with this newspaper. In other words, it can become the body that keeps track of how well the money that the government is spending on various social and infrastructure projects is being used. It is an open secret that there are leakages galore. It can also suggest ways to streamline the mess of competing anti-poverty programmes that successive governments have foisted on us.

The other option is for the Planning Commission to become an advisory body, a sort of strategic think tank for the government. The old-style industrial policy of picking winning industries and building national champions has been discredited even in its old strongholds such as South Korea and Japan. But there has been a quiet revival in the old hopes that governments can direct the path of national development. This new structuralist economics—which has influential supporters such as World Bank chief economist Justin Lin—continues to believe that the state can design an industrial policy, though such industrial policy 2.0 will take into account a nation’s factor endowments and comparative advantage. Any industrial policy means picking activities that a country can compete in, which is a tough job in these times of globalization, private sector-led growth and ever-shorter technology cycles.

The Planning Commission’s fight to stay relevant will not be an easy one.

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